COVERED PUT	PROTECTIVE PUT
About Strategy	Covered Put Option Strategy  This strategy is exactly opposite to Covered Call Strategy. Here the investor is neutral or moderately bearish in nature and wants to take advantage of the price fall in the near future. The trader will short one lot of stock future. Now the trader will short ATM Put Option, the option strike price will be his exit price. If the prices rally above the strike price, the Read more..	Protective Put Option Strategy Protective Put Strategy is a hedging strategy where trader guards himself from the downside risk. This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside. He will buy one ATM Put Option to hedge his position. Now, if the underlying asset moves either up or down, the trader is in a safe position. Read more..

COVERED PUT Vs PROTECTIVE PUT - Details

	COVERED PUT	PROTECTIVE PUT
Market View	Bearish	Bullish
Type (CE/PE)	PE (Put Option) + Underlying	PE (Put Option)
Number Of Positions	2	1
Strategy Level	Advance	Beginners
Reward Profile	Limited	Unlimited
Risk Profile	Unlimited	Limited
Breakeven Point	Futures Price + Premium Received	Purchase Price of Underlying + Premium Paid

COVERED PUT Vs PROTECTIVE PUT - When & How to use ?

	COVERED PUT	PROTECTIVE PUT
Market View	Bearish	Bullish
When to use?	The Covered Put works well when the market is moderately Bearish.	This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.
Action	Sell Underlying Sell OTM Put Option	Buy 1 ATM Put
Breakeven Point	Futures Price + Premium Received	Purchase Price of Underlying + Premium Paid

COVERED PUT Vs PROTECTIVE PUT - Risk & Reward

	COVERED PUT	PROTECTIVE PUT
Maximum Profit Scenario	The profit happens when the price of the underlying moves above strike price of Short Put.	Price of Underlying - Purchase Price of Underlying - Premium Paid
Maximum Loss Scenario	Price of Underlying - Sale Price of Underlying - Premium Received	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid
Risk	Unlimited	Limited
Reward	Limited	Unlimited

COVERED PUT Vs PROTECTIVE PUT - Strategy Pros & Cons

	COVERED PUT	PROTECTIVE PUT
Similar Strategies	Bear Put Spread, Bear Call Spread	Long Call, Call Backspread
Disadvantage	• Limited profit, unlimited risk. • Trader should have enough experience before using this strategy.	• Value of protective put position decreases as time passes • Holding period of the protective put can be affected by the timing as a result tax rate on the profit or loss from the stock can be affected.
Advantages	• Investors can book profit when underlying stock price drop, move sideways or rises by a small amount. • Able to generate monthly income. • Able to generate profit from fall in prices or mild increase in the prices.	• Unlimited potential profit due to indefinitely rise in the underlying stock price . • This strategy allows you to hold on to your stocks while insuring against losses. • Hedging strategy, trader can guard himself from the downside risk.